Should the GST be increased/widened?

[Hodgie]

Ah no. Tax evasion will land you in a prison cell, avoidance is using legal loopholes to minimise tax.

As i say, semantics.

Right you are, I had my nouns mixed up. I stand corrected.

 

[SirRumpole]

Are you aiming to assist state coffers or federal coffers? Are you hoping increase in GST improving the state coffers flows throw to lower trasfer of funds from federal coffers to state coffers?

In my dream world the States would not exist, but yes if the States get more revenue from GST, the Feds could ease off on tied grants and such.

 

[Tisme]

I reckon increasing the GST will eventually translate into increased spending and debt, rather than balancing budgets.

 

[McLovin]

Right you are, I had my nouns mixed up. I stand corrected.

So did I. In any event why shouldn't a company minimise its taxation? If the government doesn't like it, then close the loopholes.

And I disagree with the general idea that the anti-avoidance rules are not working (they're so far reaching it's hard to believe they don't), although there maybe some exceptions. I'd put good money on more revenue being lost through GST fraud (I think I saw 15% of revenue being lost) than through company taxes.

 

[noco]

At least with the GST, one new how much tax one was paying for a selected item unlike the old sales tax and the carbon tax which was a hidden cost and nobody new exactly how much extra was being paid for a product.Whether the compensation given to pensioners on the impact of the carbon tax was enough, one may never know.

Paul Keating increased the sales tax on motor vehicles from 20 to 25 % and nobody was any the wiser because it was a hidden cost. When the GST was introduced the S/T was replaced with 10% GST which cars cheaper.

If the GST was increased to 15% it would bring in an estimated amount of around $23 billion based on the same products applicable to today...I doubt very much if any party would be game enough to expand the GST to all food lines.

There will lots of opposition to any increase in the GST but somewhere along the line both state and federal governments will have to raise finance from some where whether it be death duties, vehicle registration, land tax, stamp duty and many other options and no matter which political party introduce it, it will not be popular...When the GST was introduced, state governments agreed to eliminate stamp duties and they never did....Stamp duty is still applicable to certain items even as of today.

It is up to all the states to be in agreement of any increase in the GST so the repercussions will be on all political parties....There is one thing for sure and that is all the states are after more money.

 

[McLovin]

At least with the GST, one new how much tax one was paying for a selected item unlike the old sales tax and the carbon tax which was a hidden cost and nobody new exactly how much extra was being paid for a product.Whether the compensation given to pensioners on the impact of the carbon tax was enough, one may never know.

My parents were in commercial furniture for about 30 years. The old WST was a nightmare to administer. I remember there were different tax rates depending on how high the back of an office chair was. A drink with caffeine in it (like Coke) had a different rate to one without it (like Fanta). The GST is much better. I remember how happy the guys in accounts were when the change was made.

 

[drsmith]

The GST in my view should be broadened to include all goods and services (but not investment income) with the increased proceeds to remove inefficient state taxes. That after all was its original intention before the Democrats butchered it.

 

[McLovin]

The GST in my view should be broadened to include all goods and services (but not investment income) with the increased proceeds to remove inefficient state taxes. That after all was its original intention before the Democrats butchered it.

I disagree. Food should be exempt. There are people out there who struggle to put food on the table and I struggle with the idea of putting a new tax on their backs.

 

[drsmith]

I disagree. Food should be exempt. There are people out there who struggle to put food on the table and I struggle with the idea of putting a new tax on their backs.

Compensation could be considered as necessary through the income tax/welfare system. While this would reduce the scope by which inefficient state taxes could be removed, it could still deliver a significant overall simplification to our tax system.

Some compensation would obviously also come as a result of the removal of inefficient state taxes and not all food is presently exempt.

 

[Ferret]

I also think food should remain exempt.

A diet based on fresh produce is much healthier than one of processed foods but, unfortunately, processed foods are often cheaper. This disparity shouldn't be increased.

 

[Julia]

I disagree. Food should be exempt. There are people out there who struggle to put food on the table and I struggle with the idea of putting a new tax on their backs.

I also think food should remain exempt.

A diet based on fresh produce is much healthier than one of processed foods but, unfortunately, processed foods are often cheaper. This disparity shouldn't be increased.

Agree 100% with McLovin and Ferret. Whack a tax on crap 'food', and provide an incentive to choose fresh fruit and vegetables.
We have an obesity crisis. The woman in the checkout queue ahead of me yesterday was morbidly obese.
Her trolley contained two cartons of Pepsi Max, six loaves of sliced white bread, four cakes, two packets of frozen chips, ready made pasta 'meals', and zero fruit or vegetables.

 

[drsmith]

Some food is already subject to GST and some isn't which I think is broadly based around as to whether it's cooked and/or served as take away and what isn't.

Chicken for example gives an idea of the complexitiy this creates,

https://expertsystems.ato.gov.au/sc...cSearchableFoodList.aspx?PID=68&ms=Businesses

 

[noco]

Small business with a turn over less than $75,000 do not charge GST and therefore do not collect for the Government.

It would no doubt be possible for a small business offering a service to be paid by cash and in doing so would be able to keep his turn over below $75,000.

 

[Smurf1976]

These things could be compensated for by not charging the consumer the final gst because it has already been paid for in the manufacturing and other processes and therefore added to the retail price.

That would massively favour imports over local production (of anything) unless we can somehow impose our GST on costs incurred in other countries (impractical in practice).

End result = imports more competitive, Australian business less competitive = higher unemployment and a drop in tax paid by business (due to there being less business activity).

 

[Smurf1976]

the capital gains tax discount is required to offset inflation, other wise your just taxing inflation.

The same argument could be made about interest on bank deposits since, in general terms, the rate paid is at most an offset to inflation and in many cases not even that.

 

[drsmith]

The same argument could be made about interest on bank deposits since, in general terms, the rate paid is at most an offset to inflation and in many cases not even that.

Capital investment involves greater financial risk than interest bearing deposits and thus supports more favourable tax treatment.

Negative gearing though combined with the present CGT discount favours capital investment too much in the short to medium term in my view as reflected in the price of residential property.

 

[drsmith]

Small business with a turn over less than $75,000 do not charge GST and therefore do not collect for the Government.

It would no doubt be possible for a small business offering a service to be paid by cash and in doing so would be able to keep his turn over below $75,000.

One would imagine that a turnover of $75k would lead to a relatively small profit unless the margin was very high or in other words, a hobby business.

I'm not sure what presently the best approach is to deal with transactions via Mr C. Ash but ultimately one can envisage a time when all transactions can be done or at least recorded electronically.

Ideally there shouldn't be a small business threshold but if the GST is broadened and hence simplified, that may at least offer the opportunity to lower it without it becoming an excessive burden on low turnover enterprises.

 

[Tisme]

My parents were in commercial furniture for about 30 years. The old WST was a nightmare to administer. I remember there were different tax rates depending on how high the back of an office chair was. A drink with caffeine in it (like Coke) had a different rate to one without it (like Fanta). The GST is much better. I remember how happy the guys in accounts were when the change was made.

Yes the WST book(s) was a great read. I recall partnering with a huge multi national and what amazed they hadn't picked the double negative language on the tax application and had pinged themselves with a ~20% voluntary tax for decades. Of course decades of cronyism meant that the WST was a hotchpotch of hidden incentives for favoured industries.

 

[SirRumpole]

That would massively favour imports over local production (of anything) unless we can somehow impose our GST on costs incurred in other countries (impractical in practice).

End result = imports more competitive, Australian business less competitive = higher unemployment and a drop in tax paid by business (due to there being less business activity).

That's the way it appears on the surface, but if you tax business inputs (possibly exempting salaries), then does that not encourage business to lower their costs to be more competitive and to be more efficient and discerning about what they spend their funds on ?

 

[Value Collector]

These things could be compensated for by not charging the consumer the final gst because it has already been paid for in the manufacturing and other processes and therefore added to the retail price. The rate could be adjusted
suitably so that the price effects can be controlled. Or, you can leave the GST on the final price as well and lower income tax rates and raise pensions.

The main point is that companies are avoiding company tax in spades, but they can't avoid GST. That was the main argument for imposing it on the consumer in the first place. Most PAYE consumers can't avoid income tax, but companies can. Having them pay GST makes the tax system more efficient.

the current system is the best way to ensure its 10% across all industries, and no one is disadvantaged.

the example I gave only had 3 steps, picture something like scrap metal recycling and trading, where scrap trades on thing margins, but may pass through 5 different hands before it hits the blast furnace, then there is all the manufacturing and retailing, the profit margin on the whole process would be 25% but the tax would be over 100%